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QUESTION 4 [15] The directors of Money Investments Limited are considering two mutually exclusive projects. Both projects are concerned with the purchase of land for

QUESTION 4 [15]

The directors of Money Investments Limited are considering two mutually exclusive projects. Both projects are concerned with the purchase of land for building.

Period Project A Project B

Initial outlay 0 - 100 000 - 60 000

Cash inflows 1 60 000 36 000

2 30 000 16 000

3 40 000 28 000

Required: Calculate the net present value of each of the projects and state which of two projects should the directors accept and why.

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